ASX energy stocks on watch as Aussie renewables supply ramps up

What could a slowdown in Aussie renewable investment mean for some of the top renewables stocks on the ASX like Mercury NZ Ltd (ASX: MCY)?

It's worth watching some of the top ASX renewables stocks this morning after an Australian Financial Review (AFR) article was published this morning, questioning the end of the Aussie renewables boom.

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What was in the AFR article this morning?

According to the AFR article, an increase in solar generation capabilities saw renewables account for 30% of Australia's midday power supply for the majority of June.

This, in turn, caused depressed wholesale power prices and increased pressure on coal-fired generators unable to ramp down their operations for logistical reasons.

However, underlying this trend is also the potential that increased generation of energy from renewable sources could mean a scaling back of investment in wind and solar that has been booming in both the public and private sector of late.

According to the AFR, new figures to be released on Wednesday by the Green Energy Markets analytics group will show that total solar power generation doubled in June compared with 2 years prior.

This saw the share of midday energy used climb above 30 percent for 20 out of 30 days in June, which is the first time ever this has occurred in winter.

The AFR article also said that the Clean Energy Finance Corporation (CEFC) will announce $1.5 billion of committed capital to new clean energy investments in the 2019 financial year across 30 transactions worth $6.3 billion.

The article also noted that Federal Energy Minister Angus Taylor has expressed concerns about the sudden influx of renewables projects, particularly given his goal of bringing wholesale power down below $70 per megawatt-hour.

What does this all mean for the ASX renewables stocks?

While many of the ASX energy companies have seen their share prices soar so far this year, the looming threat of oversupply and potential regulatory intervention could see some share price volatility this morning.

The Mercury NZ Ltd (ASX: MCY) share price is up 29% so far this year on strong operational expansion and margin control, while majority investor and fellow renewables group Infratil Ltd (ASX: IFT) has also seen its share price surge 29% higher.

Amongst the broader energy companies, the AGL Energy Ltd (ASX: AGL) and Origin Energy Ltd (ASX: ORG) share prices are up 3.3% and 24.4% so far this year, respectively.

I'd personally be waiting until after the August reporting season to see what sort of pipeline these companies have planned for FY20 and beyond, while also keeping an eye on average pricing trends within their results releases.

While the renewables investment boom may be slowing, there's still no reason why investing in some of these groups with long-term, strategic portfolio planning around renewables can't be a profitable 'buy-and-hold' investment strategy for growth-seeking Fools.

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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